Zurn Elkay's Q2 2025 Earnings Call: Contradictions in Pricing, Growth Expectations, and Market Strategies

Price increase strategy, filter sales growth expectations, M&A pipeline and strategy, waterworks market performance, and product category growth and market conditions are the key contradictions discussed in Zurn Elkay Water Solutions Corporation's latest 2025Q2 earnings call.



Revenue and Sales Growth:
- Zurn Elkay Water Solutions Corporation reported sales of $445 million in Q2 2025, indicating an 8% year-over-year organic growth.
- The growth was driven by solid execution on growth initiatives, with approximately $8 million to $10 million coming from customers ordering ahead of price increases and a 1 point contribution from tariff-related price increases.

Profitability and Margins:
- The company's adjusted EBITDA was $118 million, with an EBITDA margin expansion of 120 basis points to 26.5%.
- This was due to volume leverage, productivity initiatives, and continuous improvement activities across the organization.

Sustainability and Social Impact:
- Zurn Elkay prevented 9.6 billion single-use plastic water bottles from entering water streams and delivered 1.2 billion gallons of safer, cleaner filtered water through its installed base, up 21% compared to the prior year.
- These initiatives are part of their ongoing commitment to environmental sustainability and social responsibility.

Tariff and Supply Chain Management:
- The company's supply chain team has been committed to reducing direct material supply chain exposure from China, with plans to have less than 2% to 3% of their cost of goods sold from China by the end of 2026.
- This proactive approach is aimed at mitigating the impact of tariffs and ensuring long-term supply chain stability.